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What Is SIP (Systematic Investment Plan) | What is SIP in Mutual Funds | Advantage Of SIP | Full Form of SIP

What Is SIP (Systematic Investment Plan)?

We have heard many times that the ocean is formed by small drops and this thing is also cent percent correct.  The same thing applies in the case of investment.  It is not at all necessary that we always have to make a big investment in order to earn a large amount. 

    By knoing this, the financial situation of the person may be unnecessarily burdened because, in the course of making big investments, he will keep his financial condition in check.  Therefore, if small investments are made regularly, then in the long term, large funds can be prepared without any risk.  SIP works in a similar way. 

    SIP

     A very easy way to invest with little loss.  In which you can save for a big goal by investing a fixed amount every month/interval, then after that small amount of investment you can get a big amount in a long time. 

    SIPs are similar to investing in mutual funds, instead of investing in a lump sum, a fixed amount is invested in the mutual fund every month. The investor's bank account is linked to the SIP scheme. A fixed amount is invested by the bank every month. Mutual fund transfer is done from the account and mutual fund units of the same amount are transferred to the account of the investor.

    Being simple and automated, SIP is very popular nowadays.


     Through SIP, the investor has to invest in the stock market, Mutual Fund or Commodity (Gold), etc. for a certain amount of time, for those people who are not much aware of the stock market and are ignorant of how the market works.  For investing through SIP is a much better solution.  The SIP invests the stipulated amount at fixed time intervals.  An investor can invest in the stock market, Mutual Fund and GOLD ETF through SIP.

    Investment through SIPs in mutual funds has increased rapidly in the last few years. If you also want to earn a good return on your savings, then we are telling you how you can easily invest in SIP.


    There are also investors of these who are already investing in SIP but are not very clear about its position. Here we are presenting a quick guide to SIP for you.


    With its help, you will be able to know how by using SIP in mutual funds, you can also make big assets in the long term.


    SIP or Lump sum investment?

    The biggest question for any mutual fund investor is which fund to choose. Suppose you have selected a fund scheme after assessing your risk appetite. Now the second biggest question arises that how to invest? Whether investing in lump sum or investing through SIP. Before discussing this in detail, let us know what is the difference between the two ways of investing in mutual funds.

    Advantage Of SIP (Systematic Investment Plan)

    There are many advantages of SIP such as tax exemption, ease of investment, etc. There are some other advantages besides these. Let's know what is the benefit of SIP: 


    1) Small investment: - As we all know that there's a hard and fast interval in it. One has got to invest a hard and fast amount on a daily basis, so it's very easy to withdraw funds for investment from your routine and expenses. - you'll get an outsized amount by investing bit continuously for an extended time at fixed intervals. 

    If you invest 1000 ₹ monthly at the speed of 10 percent interest return, then in 15 years you'll get around 414,470 ₹ on completion of the amount of your investment. Whereas in these 15 years you want to have deposited only Rs. 1,80,000. you'll start investing in SIP with 500 rupees. which may provide you good profits within the end of the day .


    2) Easy to take a position : - it's very easy to invest in SIP. For this, there's no got to worry, just after choosing your plan, on a particular date, the open-end fund withdraws funds from your account and deposits it in your chosen plan. 

    Your checking account is linked to your SIP scheme account. a bit like your plan is to take a position 1000 ₹ monthly , then you're transferred from your checking account to an account with 1000 ₹ SIP monthly . Those sent money is employed to shop for the unit, which can benefit you within the future.


    3) Risk reduction: - the most important and main advantage of SIP is that the danger in it's quite low. Suppose you've got fifty thousand rupees to take a position within the stock exchange . you set those rupees together within the stock. Now you are doing not know whether the market will go up or down subsequent day. 

    This is able to be quite risky deal. If this investment is distributed during a short interval, then the danger decreases. we will save ourselves from the loss of the stock exchange by depositing this 50,000 rupees in an interval of 10 installments of 5000 ₹. Similarly, SIP protects us from the losses of stock exchange by investing bit thanks to not putting big amount together.


    4) Tax exemption: - once you invest in SIP, then you are doing not incur any quite tax on investing or withdrawing the quantity . But tax-exempt schemes have a lock-in period like 3 years. you'll get tax exemption by investing in them.


    5) Systematic and disciplined investment: - to take a position in SIP, bit (according to your plan) is invested regularly by withdrawing from your account. With this, discipline and order is maintained in your investment process. This discipline encourages you to save lots of and instills the habit of saving you.


    6) Benefits of Compounding: The word Compounding means to urge interest even on interest. Whenever an investment is formed in SIP and whatever return is received on the quantity invested, it's reinvested back there again, which increases the profit of the investor and within the profits of that investment. Increase comes.


    7) Facility to withdraw money from SIP: Most SIP scheme doesn't have any lock in period. Lock in period is that the time without which you can't withdraw your money from the scheme. But most SIP schemes don't have a lock in period. - Investor can plan to continue or stop investing in SIP as per their need. With this, the investor not only gets good returns but also gets advanced liquidity as per his convenience.

    Today you'll start investing in SIP at the speed of just 500 ₹ monthly . during this you are doing not got to choose open-end fund . Most of the items during this are automatic. The enjoy SIP is extremely high and its loss is negligible.

    Thanks For Visiting & Happy Investing.

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